Principles of Cost Accounting
17th Edition
ISBN: 9781305087408
Author: Edward J. Vanderbeck, Maria R. Mitchell
Publisher: Cengage Learning
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Chapter 10, Problem 3E
The chief executive officer of Acadia, Inc. attended a conference in which one of the sessions was devoted to variable costing. The CEO was impressed by the presentation and has asked that the following data of Acadia, Inc. be used to prepare comparative statements using variable costing and the company’s absorption costing. The data follow:
The factory produced 80,000 units during the period, and 70,000 units were sold for $700,000.
- 1. Prepare an income statement using variable costing.
- 2. Prepare an income statement using absorption costing.
(Round unit costs to three decimal places.)
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Students have asked these similar questions
Dhaka Power Corporation is one of Walton’s equipment suppliers. Dhaka Power currently uses traditional costing for making business decisions. Upon request from Walton, the company has decided to move to activity-based costing for equipment production related to products WAL101 and WAL201. As one of the company’s management accountants, you have been asked to prepare an analysis comparing the two costing methods for the next company board meeting. Your CFO has given you the following quarterly data from the Dhaka Power Corporation’s costing system:
Answer the following questions: a) What is the total manufacturing cost per unit using traditional costing for WAL101 and WAL201? Use machine hours as the cost-allocation base.b) What is the total manufacturing cost per unit using activity-based costing for WAL101 and WAL201?c) What conclusions can be drawn from your results?
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the income statement under absorption costing for external reporting. For its first month of operations, 400
bikes were produced and 240 were sold. Income statement information under variable costing follows.
Sales (240 × $1,700)
Variable cost of goods sold (240 × $625)
Variable selling and administrative expenses (240 × $65)
Contribution margin
Fixed overhead
Fixed selling and administrative expenses
Income
Prepare the company's income statement under absorption costing.
Gross profit
Income
HAYEK BIKES
Income Statement (Absorption Costing)
Loss
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Selling and administrative expenses
$ 408,000
150,000
15,600
242,400
76,000
75,000
$ 91,400
The chief executive officer of Acadia, Inc. attended a conference in which one of the sessions was devoted to variable costing. The CEO was impressed by the presentation and has asked
that the following data of Acadia, Inc. be used to prepare comparative statements using variable costing and the company's absorption costing. The data follow:
Direct materials..
$ 90,000
Direct labor....
120,000
Variable factory overhead,
60,000
Fixed factory overhead.
150,000
Fixed marketing and administrative expense.
180,000
The factory produced 80,000 units during the period, and 70,000 units were sold for $700,000.
1. Prepare an income statement using variable costing.
2. Prepare an income statement using absorption costing.
(Round unit costs to three decimal places.)
Chapter 10 Solutions
Principles of Cost Accounting
Ch. 10 - What is the difference between absorption costing...Ch. 10 - Distinguish between product costs and period...Ch. 10 - What effect will applying variable costing have on...Ch. 10 - What are the advantages and disadvantages of using...Ch. 10 - Prob. 5QCh. 10 - What is the difference between gross margin and...Ch. 10 - Why are there objections to using absorption...Ch. 10 - What are common costs?Ch. 10 - How is a contribution margin determined, and why...Ch. 10 - What are considered direct costs in segment...
Ch. 10 - What is cost-volume-profit analysis?Ch. 10 - Prob. 12QCh. 10 - What steps are required in constructing a...Ch. 10 - What is the difference between the contribution...Ch. 10 - What impact does income tax have on the break-even...Ch. 10 - Define differential analysis, differential...Ch. 10 - Prob. 17QCh. 10 - Prob. 18QCh. 10 - What are distribution costs?Ch. 10 - What is the purpose of the analysis of...Ch. 10 - In cost analysis, what determines which costs...Ch. 10 - Yellowstone Fabricators uses a process cost system...Ch. 10 - Using the information presented in E10-1, prepare...Ch. 10 - The chief executive officer of Acadia, Inc....Ch. 10 - The following production data came from the...Ch. 10 - A company had income of 50,000, using variable...Ch. 10 - The fixed overhead budgeted for Ranier Industries...Ch. 10 - Columbia Products Inc. has two divisions, Salem...Ch. 10 - The sales price per unit is 13 for the Voyageur...Ch. 10 - Teton, Inc. sells its only product for 50 per...Ch. 10 - A new product is expected to have sales of...Ch. 10 - Augusta Industries manufactures and sells two...Ch. 10 - A company has sales of 1,000,000, variable costs...Ch. 10 - Prob. 13ECh. 10 - A company has prepared the following statistics...Ch. 10 - Prob. 15ECh. 10 - Prob. 16ECh. 10 - Redwood Industries needs 20,000 units of a certain...Ch. 10 - Prob. 18ECh. 10 - Biscayne Industries has determined the cost of...Ch. 10 - Roosevelt Enterprises has determined the cost of...Ch. 10 - Prob. 3PCh. 10 - Prob. 4PCh. 10 - Prob. 5PCh. 10 - Arctic Software Inc. has two product lines. The...Ch. 10 - Prob. 7PCh. 10 - The production of a new product required Zion...Ch. 10 - Grand Canyon Manufacturing Inc. produces and sells...Ch. 10 - Prob. 10PCh. 10 - Emerald Island Company is considering building a...Ch. 10 - Royale Aluminum desires an after-tax income of...Ch. 10 - Deuce Sporting Goods manufactures a high-end model...Ch. 10 - Prob. 14PCh. 10 - Prob. 15PCh. 10 - Prob. 1MCCh. 10 - Denali Company manufactures household products...
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